HB4714 97TH GENERAL ASSEMBLY

LRB097 19222 PJG 64464 b

97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB4714

Introduced 2/3/2012, by Rep. Pam Roth

SYNOPSIS AS INTRODUCED:

205 ILCS 510/0.05
205 ILCS 510/1	from Ch. 17, par. 4651
205 ILCS 510/1.2 new
205 ILCS 510/1.4 new
205 ILCS 510/4.5 new
205 ILCS 510/5	from Ch. 17, par. 4655
205 ILCS 510/6	from Ch. 17, par. 4656
205 ILCS 510/7	from Ch. 17, par. 4657
205 ILCS 510/7.5
205 ILCS 510/8	from Ch. 17, par. 4658
205 ILCS 510/9	from Ch. 17, par. 4659
205 ILCS 510/11	from Ch. 17, par. 4661
205 ILCS 510/12

Amends the Pawnbroker Regulation Act. Defines "precious metal scrapper". Provides that the Secretary of Financial and Professional Regulation shall issue licenses on an annual or multi-year basis for operating a precious metal scrapper. Provides that it shall be unlawful to operate a precious metal scrapper without a license issued by the Secretary. Provides that a precious metal scrapper may not, upon physical receipt of gold or silver, offer, promise, or pay the seller an amount less than 60% of the gold or silver's actual melt value. Provides that, upon physical receipt of gold or silver, a precious metal scrapper must maintain possession of the gold or silver for a period of 10 business days. Makes changes concerning the administration of the Act, manager licensing, record requirements, the inspection of records, daily reports, reports to the Secretary, violations of the Act, and hold orders.

FISCAL NOTE ACT MAY APPLY

HOME RULE NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Pawnbroker Regulation Act is amended by changing Sections 0.05, 1, 5, 6, 7, 7.5, 8, 9, 11, and 12 and by adding Sections 1.2, 1.4, and 4.5 as follows:

(205 ILCS 510/0.05)

Sec. 0.05. Administration of Act.

(a) This Act shall be administered by the Secretary of Financial and Professional Regulation, and, beginning on July 28, 2010 (the effective date of Public Act 96-1365), all references in this Act to the Commissioner of Banks and Real Estate are deemed, in appropriate contexts, to be references to the Secretary of Financial and Professional Regulation, who shall have all of the following powers and duties in administering this Act:

(1) To promulgate reasonable rules for the purpose of administering the provisions of this Act.

(2) To issue orders for the purpose of administering the provisions of this Act and any rule promulgated in accordance with this Act.

(2.5) To order restitution to consumers suffering damages resulting from violations of this Act, rules promulgated in accordance with this Act, or other laws or regulations related to the operation of a pawnshop or precious metal scrapper.

(3) To appoint hearing officers and to hire employees or to contract with appropriate persons to execute any of the powers granted to the Secretary under this Section for the purpose of administering this Act and any rule promulgated in accordance with this Act.

(4) To subpoena witnesses, to compel their attendance, to administer an oath, to examine any person under oath, and to require the production of any relevant books, papers, accounts, and documents in the course of and pursuant to any investigation being conducted, or any action being taken, by the Secretary in respect of any matter relating to the duties imposed upon, or the powers vested in, the Secretary under the provisions of this Act or any rule promulgated in accordance with this Act.

(5) To conduct hearings.

(6) To impose civil penalties graduated up to $1,000 against any person for each violation of any provision of this Act, any rule promulgated in accordance with this Act, or any order of the Secretary based upon the seriousness of the violation.

(6.5) To initiate, through the Attorney General, injunction proceedings whenever it appears to the Secretary that any person, whether licensed under this Act or not, is engaged or about to engage in an act or practice that constitutes or will constitute a violation of this Act or any rule prescribed under the authority of this Act. The Secretary may, in his or her discretion, through the Attorney General, apply for an injunction, and upon a proper showing, any circuit court may enter a permanent or preliminary injunction or a temporary restraining order without bond to enforce this Act in addition to the penalties and other remedies provided for in this Act.

(7) To issue a cease and desist order and, for violations of this Act, any order issued by the Secretary pursuant to this Act, any rule promulgated in accordance with this Act, or any other applicable law in connection with the operation of a pawnshop or precious metal scrapper, to suspend a license issued under this Act for up to 30 days.

(8) To determine compliance with applicable law and rules related to the operation of pawnshops and precious metal scrappers and to verify the accuracy of reports filed with the Secretary, the Secretary, not more than one time every 2 years, may, but is not required to, conduct a routine examination of a pawnshop or precious metal scrapper, and in addition, the Secretary may examine the affairs of any pawnshop or precious metal scrapper at any time if the Secretary has reasonable cause to believe that unlawful or fraudulent activity is occurring, or has occurred, therein.

(9) In response to a complaint, to address any inquiries to any pawnshop or precious metal scrapper in relation to its affairs, and it shall be the duty of the pawnshop or precious metal scrapper to promptly reply in writing to such inquiries. The Secretary may also require reports or information from any pawnshop or precious metal scrapper at any time the Secretary may deem desirable.

(10) To revoke a license issued under this Act if the Secretary determines that (a) a licensee has been convicted of a felony in connection with the operations of a pawnshop or precious metal scrapper; (b) a licensee knowingly, recklessly, or continuously violated this Act or State or federal law or regulation, a rule promulgated in accordance with this Act, or any order of the Secretary; (c) a fact or condition exists that, if it had existed or had been known at the time of the original application, would have justified license refusal; (d) the licensee knowingly submits materially false or misleading documents with the intent to deceive the Secretary or any other party; or (e) the licensee is unable or ceases to continue to operate the pawnshop or precious metal scrapper.

(10.2) To remove or prohibit the employment of any officer, director, employee, or agent of the pawnshop or precious metal scrapper who engages in or has engaged in unlawful activities that relate to the operation of a pawnshop or precious metal scrapper.

(10.7) To prohibit the hiring of employees who have been convicted of a financial crime or any crime involving breach of trust who do not meet exceptions as established by rule of the Secretary.

(11) Following license revocation, to take possession and control of a pawnshop or precious metal scrapper for the purpose of examination, reorganization, or liquidation through receivership and to appoint a receiver, which may be the Secretary, a pawnshop, a precious metal scrapper, or another suitable person.

(b) After consultation with local law enforcement officers, the Attorney General, and the industry, the Secretary may by rule require that pawnbrokers or precious metal scrappers operate video camera surveillance systems to record photographic representations of customers and retain the tapes produced for up to 30 days.

(c) Pursuant to rule, the Secretary shall issue licenses on an annual or multi-year basis for operating a pawnshop and for operating a precious metal scrapper. Any person currently operating or who has operated a pawnshop in this State during the 2 years preceding the effective date of this amendatory Act of 1997 shall be issued a license upon payment of the fee required under this Act. Any person currently operating or who has operated a precious metal scrapper in this State during the 2 years preceding the effective date of this amendatory Act of the 97th General Assembly shall be issued a license upon payment of the fee required under this Act. New applicants shall meet standards for a license as established by the Secretary. Except with the prior written consent of the Secretary, no individual, either a new applicant or a person currently operating a pawnshop or precious metal scrapper, may be issued a license to operate a pawnshop or precious metal scrapper if the individual has been convicted of a felony or of any criminal offense relating to dishonesty or breach of trust in connection with the operations of a pawnshop or precious metal scrapper. The Secretary shall establish license fees. The fees shall not exceed the amount reasonably required for administration of this Act. It shall be unlawful to operate a pawnshop or precious metal scrapper without a license issued by the Secretary.

(d) In addition to license fees, the Secretary may, by rule, establish fees in connection with a review, approval, or provision of a service, and levy a reasonable charge to recover the cost of the review, approval, or service (such as a change in control, change in location, or renewal of a license). The Secretary may also levy a reasonable charge to recover the cost of an examination if the Secretary determines that unlawful or fraudulent activity has occurred. The Secretary may require payment of the fees and charges provided in this Act by certified check, money order, an electronic transfer of funds, or an automatic debit of an account.

(e) The Pawnbroker Regulation Fund is established as a special fund in the State treasury. Moneys collected under this Act shall be deposited into the Fund and used for the administration of this Act. In the event that General Revenue Funds are appropriated to the Department of Financial and Professional Regulation for the initial implementation of this Act, the Governor may direct the repayment from the Pawnbroker Regulation Fund to the General Revenue Fund of such advance in an amount not to exceed $30,000. The Governor may direct this interfund transfer at such time as he deems appropriate by giving appropriate written notice. Moneys in the Pawnbroker Regulation Fund may be transferred to the Professions Indirect Cost Fund, as authorized under Section 2105-300 of the Department of Professional Regulation Law of the Civil Administrative Code of Illinois.

(f) The Secretary may, by rule, require all pawnshops and precious metal scrappers to provide for the expenses that would arise from the administration of the receivership of a pawnshop or precious metal scrapper under this Act through the assessment of fees, the requirement to pledge surety bonds, or such other methods as determined by the Secretary.

(g) All final administrative decisions of the Secretary under this Act shall be subject to judicial review pursuant to the provisions of the Administrative Review Law. For matters involving administrative review, venue shall be in either Sangamon County or Cook County.

(Source: P.A. 96-1038, eff. 7-14-10; 96-1365, eff. 7-28-10; 97-333, eff. 8-12-11.)

(205 ILCS 510/1) (from Ch. 17, par. 4651)

Sec. 1. (a) Every individual or business entity which lends money on the deposit or pledge of physically delivered personal property, other than property the ownership of which is subject to a legal dispute, securities, printed evidence of indebtedness or printed evidence of ownership of the personal property, or who deals in the purchase of such property on the condition of selling the property back again at a stipulated price, shall be held and is hereby declared and defined to be a pawnbroker. The business of a pawnbroker does not include the lending of money on deposit or pledge of title to property.

(b) (Blank). The Secretary may require employees of pawnshops who have the authority to act in a managerial capacity to obtain a license from the Department. For the purposes of this Section, "managerial capacity" shall mean the ability to direct the operations or activities of the pawnshop. If the Secretary determines a pawnshop employee's duties and responsibilities or other factors amount to acting in a managerial capacity, the Secretary may require licensing. The license shall be valid for 2 years. The Secretary may by rule specify the form of the application for licensure, fees to be imposed and conditions for licensure. The licensed employees shall report their places of employment to the Secretary.

(Source: P.A. 96-1365, eff. 7-28-10.)

(205 ILCS 510/1.2 new)

Sec. 1.2. Precious metal scrapper. Every business entity which offers payment for the physical delivery of gold or silver and at least 50% of whose revenue is generated by the melting down, reformation, or re-selling of that gold or silver shall be held and is hereby declared and defined to be a precious metal scrapper.

(205 ILCS 510/1.4 new)

Sec. 1.4. Manager licensing. The Secretary may require employees of pawnshops and precious metal scrappers who have the authority to act in a managerial capacity to obtain a license from the Department. For the purposes of this Section, "managerial capacity" shall mean the ability to direct the operations or activities of the pawnshop or precious metal scrapper. If the Secretary determines a pawnshop or precious metal scrapper employee's duties and responsibilities or other factors amount to acting in a managerial capacity, the Secretary may require licensing. The license shall be valid for 2 years. The Secretary may by rule specify the form of the application for licensure, fees to be imposed, and conditions for licensure. The licensed employees shall report their places of employment to the Secretary.

(205 ILCS 510/4.5 new)

Sec. 4.5. Offer, promise, or payment amount; period of possession.

(a) Upon physical receipt of gold or silver, a precious metal scrapper may not offer, promise, or pay the seller an amount less than 60% of the gold or silver's actual melt value, which shall be determined using the gold or silver's weight, purity, and spot value taken from the previous 3 business days of trading on a major stock exchange located within the United States.

(b) Upon physical receipt of gold or silver, each precious metal scrapper must maintain possession of the gold or silver and may not melt or otherwise alter, re-form, or re-sell the gold or silver for a period of 10 business days.

(205 ILCS 510/5) (from Ch. 17, par. 4655)

Sec. 5. Record requirements.

(a) Except in municipalities located in counties having 3,000,000 or more inhabitants, every pawn and loan broker and precious metal scrapper shall keep a standard record book that has been approved by the sheriff of the county in which the pawnbroker or precious metal scrapper does business. In municipalities in counties with 3,000,000 or more inhabitants, the record book shall be approved by the police department of the municipality in which the pawn or loan broker or precious metal scrapper does business. At the time of each and every purchase, loan, or taking of a pledge, an accurate account and description, in the English language, of all the goods, articles and other things pawned, purchased, or pledged, the amount of money, value or thing loaned or purchased thereon, the time of pledging the same, the rate of interest to be paid on such loan, the weight, purity, and spot price of any gold or silver purchased, and the name and residence of the person making such pawn, sale, or pledge shall be printed, typed, or written in ink in the record book. Such entry shall include the serial number or identification number of items received which bear such number. Except for items purchased from dealers possessing a federal employee identification number who have provided a receipt to the pawnbroker or precious metal scrapper, every pawnbroker and precious metal scrapper shall also record in his book, an accurate account and description, in the English language, of all goods, articles and other things purchased or received for the purpose of resale or loan collateral by the pawnbroker or precious metal scrapper from any source, not in the course of a pledge or loan, the time of such purchase or receipt and the name and address of the person or business which sold or delivered such goods, articles, or other things to the pawnbroker or precious metal scrapper. No entry in such book shall be erased, mutilated or changed.

(b) Every pawnbroker and precious metal scrapper shall require identification to be shown him by each person selling, pledging, or pawning any goods, articles or other things to the pawnbroker or precious metal scrapper. If the identification shown is a driver's license or a State identification card issued by the Secretary of State and contains a photograph of the person being identified, only one form of identification must be shown. If the identification shown is not a driver's license or a State identification card issued by the Secretary of State and does not contain a photograph, 2 forms of identification must be shown, and one of the 2 forms of identification must include his or her residence address. These forms of identification shall include, but not be limited to, any of the following: driver's license, social security card, utility bill, employee or student identification card, credit card, or a civic, union or professional association membership card. In addition, in a municipality with a population of 1,000,000 or more inhabitants, if the customer does not have an identification issued by a governmental entity containing a photograph of the person being identified, the pawnbroker or precious metal scrapper shall photograph the customer in color and record the customer's name, residence address, date of birth, social security number, gender, height, and weight on the reverse side of the photograph. If the customer has no social security number, the pawnbroker or precious metal scrapper shall record this fact.

A county or municipality, including a home rule unit, may regulate a pawnbroker's or precious metal scrapper's identification requirements for persons selling, pledging, or pawning goods, articles, or other things to the pawnbroker or precious metal scrapper in a manner that is not less restrictive than the regulation by the State of a precious metal scrapper's or pawnbroker's identification requirements for persons selling, pledging, or pawning goods, articles, or other things. A home rule unit may not regulate a precious metal scrapper's or pawnbroker's identification requirements for persons selling, pledging, or pawning goods, articles, or other things to the pawnbroker or precious metal scrapper in a manner less restrictive than the regulation by the State of a precious metal scrapper's or pawnbroker's identification requirements for persons pledging or pawning goods, articles, or other things. This Section is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of the powers and functions exercised by the State.

(c) A pawnbroker or precious metal scrapper may maintain the records required by subsection (a) in computer form if the computer form has been approved by the Commissioner, the sheriff of the county in which the shop is located, and the police department of the municipality in which the shop is located.

(d) Records, including reports to the Secretary, maintained by pawnbrokers and precious metal scrappers shall be confidential, and no disclosure of pawnbroker or precious metal scrapper records shall be made except disclosures authorized by this Act or ordered by a court of competent jurisdiction. No record transferred to a governmental official shall be improperly disclosed, provided that use of those records as evidence of a felony or misdemeanor shall be a proper purpose.

(e) Pawnbrokers, precious metal scrappers, and their associations may lawfully give appropriate governmental agencies computer equipment for the purpose of transferring information pursuant to this Act.

(Source: P.A. 96-1038, eff. 7-14-10.)

(205 ILCS 510/6) (from Ch. 17, par. 4656)

Sec. 6. Inspection of records.

(a) The book or computer records, as well as every article or other thing of value so sold, pawned, or pledged, shall at all times be open to the inspection of the Secretary, the sheriff of the county, his deputies, or any members of the police force of any city in the county in which such pawnbroker or precious metal scrapper does business. In addition, the Secretary shall be authorized to inspect the books or records of any business he or she has reasonable cause to believe is conducting pawn or precious metal scrapping transactions and should be licensed under this Act.

(b) The book or computer records, pawn tickets, or any other records required by the Secretary under this Act or any rule promulgated in accordance with this Act shall be maintained for a period of 3 years after the date on which the record or ticket was prepared. These records and tickets shall be open to inspection of the Secretary at all times during the 3-year period.

(Source: P.A. 96-1038, eff. 7-14-10.)

(205 ILCS 510/7) (from Ch. 17, par. 4657)

Sec. 7. Daily report.

(a) Except as provided in subsection (b), it shall be the duty of every pawnbroker and precious metal scrapper to make out and deliver to the sheriff of the county in which such pawnbroker or precious metal scrapper does business, on each day before the hours of 12 o'clock noon, a legible and exact copy from the standard record book, as required in Section 5 of this Act, that lists all personal property and any other valuable thing received on deposit or purchased during the preceding day, including the exact time when received or purchased, and a description of the person or person by whom left in pledge, or from whom the same were purchased; provided, that in cities or towns having 25,000 or more inhabitants, a copy of the such report shall at the same time also be delivered to the superintendent of police or the chief police officer of such city or town. Such report may be made by computer printout or input memory device if the format has been approved by the local law enforcement agency.

(b) In counties with more than 3,000,000 inhabitants, a pawnbroker or precious metal scrapper must provide the daily report to the sheriff only if the pawnshop or precious metal scrapper is located in an unincorporated area of the county. Pawnbrokers and precious metal scrappers located in cities or towns in such counties must deliver such reports to the superintendent of police or the chief police officer of such city or town.

(Source: P.A. 90-477, eff. 7-1-98; 90-602, eff. 7-1-98.)

(205 ILCS 510/7.5)

Sec. 7.5. Report to the Secretary. The Secretary, as often as the Secretary shall deem necessary or proper, may require a pawnshop or precious metal scrapper to submit a full and detailed report of its operations including, but not limited to, the number of pawns and purchases made, the amount financed on pawn and purchase transactions, and the number and amount of pawns and purchases surrendered to law enforcement.

The Secretary shall prescribe the form of the report and establish the date by which the report must be filed.

(Source: P.A. 96-1038, eff. 7-14-10.)

(205 ILCS 510/8) (from Ch. 17, par. 4658)

Sec. 8. No pawnbroker or precious metal scrapper shall take or receive any purchase, pawn, or pledge for any advancement or loan, any property of any kind from any minor who is under 18 years of age, or the ownership of which is in, or which is claimed by, any such minor, or which may be in the possession or under the control of any such minor.

(Source: P.A. 84-478.)

(205 ILCS 510/9) (from Ch. 17, par. 4659)

Sec. 9. No pawnbroker or precious metal scrapper shall purchase or take any article in pawn or pledge from any person appearing to be intoxicated, nor from any person known to have been convicted of theft. A law enforcement officer may provide such criminal conviction information to a pawnbroker or precious metal scrapper. When any person is found to be the owner of stolen property which has been pawned or sold, such property shall be returned to the owner thereof without the payment of the money advanced by the pawnbroker or precious metal scrapper thereon or any costs or charges of any kind which the pawnbroker or precious metal scrapper may have placed upon the same.

(Source: P.A. 84-1308.)

(205 ILCS 510/11) (from Ch. 17, par. 4661)

Sec. 11. Violations. Every person who knowingly violates the provisions of this Act shall, for the first offense, be guilty of a Class C misdemeanor, and for each subsequent offense shall be guilty of a Class A misdemeanor, except that a person who knowingly violates this Act by operating a pawnshop or precious metal scrapper without a license shall be guilty of a Class B misdemeanor for the first offense and shall be guilty of a Class A misdemeanor for any subsequent offense. This Act shall not be construed as to, in any wise, impair the power of cities or villages in this State to license, tax, regulate except as to fee amounts, suppress, and prohibit pawnbrokers or precious metal scrappers as now provided by law.

(Source: P.A. 92-215, eff. 8-2-01.)

(205 ILCS 510/12)

Sec. 12. Hold order.

(a) For the purposes of this Section, "hold order" means a written legal instrument issued to a pawnbroker or precious metal scrapper by a law enforcement officer commissioned by the law enforcement agency of the municipality or county that licenses and regulates the pawnbroker or precious metal scrapper, ordering the pawnbroker or precious metal scrapper to retain physical possession of pledged goods in the possession of the pawnbroker or precious metal scrapper or property purchased by and in the possession of the pawnbroker or precious metal scrapper and not to return, sell, or otherwise dispose of such property as such property is believed to be misappropriated goods.

(b) Upon written notice from a law enforcement officer indicating that property in the possession of a pawnbroker or precious metal scrapper and subject to a hold order is needed for the purpose of furthering a criminal investigation and prosecution, the pawnbroker or precious metal scrapper shall release the property subject to the hold order to the custody of the law enforcement officer for such purpose and the officer shall provide a written acknowledgment that the property has been released to the officer. The release of the property to the custody of the law enforcement officer shall not be considered a waiver or release of the precious metal scrapper's or pawnbroker's property rights or interest in the property. Upon completion of the criminal investigation, the property shall be returned to the pawnbroker or precious metal scrapper who consented to its release; except that, if the law enforcement officer has not completed the criminal investigation within 120 days after its release, the officer shall immediately return the property to the pawnbroker or precious metal scrapper or obtain and furnish to the pawnbroker or precious metal scrapper a warrant for the continued custody of the property.

The pawnbroker or precious metal scrapper shall not release or dispose of the property except pursuant to a court order or the expiration of the holding period of the hold order, including all extensions.

In cases where criminal charges have been filed and the property may be needed as evidence, the prosecuting attorney shall notify the pawnbroker or precious metal scrapper in writing. The notice shall contain the case number, the style of the case, and a description of the property. The pawnbroker or precious metal scrapper shall hold such property until receiving notice of the disposition of the case from the prosecuting attorney. The prosecuting attorney shall notify the pawnbroker or precious metal scrapper and claimant in writing within 15 days after the disposition of the case.

(Source: P.A. 96-1365, eff. 7-28-10.)